What if a major mid-priced steak chain put a smaller version of their steakhouse in an area that was growing with hotels, condominiums and thousands of tourists annually all within a two mile range. The location was on a corner of a shopping strip at a traffic light with access from all directions and street parking as well as excess parking in a lot behind the restaurant. To make the package even more attractive was the fact that no other chains existed within at least four miles.

A “no-brainer” you say. That’s what Outback Steakhouse thought about one of its locations. After five years and many thousands of marketing dollars, they closed the restaurant.

In The Restaurant Ebook it was predicted as well as another similar anecdote about a famous chain and one of their corporate decisions.

Placement of a restaurant is critical. Demographics and clear understanding of your potential guests’ demand and habits have to be part of the decision making process.

In the case of Outback, the location was on an island beach resort. There was a mix of residences within their target market, but not enough to sustain the location year round. A large part of the equation was that the thousands of tourists who visited the area were incorrectly counted heavily as potential customers. Outback failed to understand that a large contingent of travelers don’t want to go to a carbon copy restaurant they can visit at home. They want local unique restaurants that provide the travel experience they are seeking.

Another blunder was the fact that a gulf front island means a demand for seafood, not beef. To survive, Outback would have to change their menu, name and probably act more like a quaint independent than a cookie cutter chain. Big companies don’t do this very well except when looking for acquisitions and new concepts that someone else has successfully developed.

It is not particularly pleasant to be right about the prediction of this closure. It is always sad to see people lose their jobs. However, maybe the lessons from Outback’s errors can give entrepreneurs cause for taking a better look at their location and escape a similar fate.

When doing research for opening, planning and operating your restaurant, consider The Restaurant Ebook your guide to increasing the odds of survival.

Larry Edger, Author

The Restaurant Ebook